Leumi ABL’s Phil Woodward talks to James Harris about the recovering appetite for asset-based lending.

Leumi ABL’s Phil Woodward talks to James Harris about the recovering appetite for asset-based lending.

While many finance providers bemoan the downturn in activity during this recession, Leumi ABL is not one of them. With 50 M&A deals and refinancing opportunities in the pipeline, and a string of recently completed deals, the asset-based lending provider is enjoying a very busy year.

In May, Leumi ABL backed the management buy-out of automotive castings business Contech Operating UK from its US parent. To the untrained eye, backing any business in such a hard-hit sector may have seemed like a strange move.

Phil Woodward, managing director of Leumi ABL, says, ‘A lot of funders failed to take the time to understand the business or assess the true potential of the opportunity. Contech has an exceptional management team and is profitable and cash generative, with a healthy order book. We provided a headroom facility as we were confident in the assets and high quality of the debtors. It was a sensible deal.’

Sticking to its guns

As clients seek to maximise funding available, the market appetite for structured asset-based lending facilities is growing. Brighton-based Leumi ABL offers working capital solutions to businesses by funding against invoices, stock and plant and machinery, plus trade and property finance via its parent, Bank Leumi (UK) plc. The sums involved range from £1 million to £25 million.

Although some other asset-based lenders have struggled, Woodward claims that much of Leumi’s performance is attributable to sticking to the basics. ‘During recent months, there have been a lot of overstretched funders, who have supplemented ABL facilities with cash flow loans. With ABL, the class of asset is our primary focus. Funding is made available against a variety of assets, which are professionally appraised and valued.’

An example of this occurred in July, when Leumi ABL backed Walstead Investments with its acquisition of Southernprint from Newsquest Media Group, providing a £4 million funding line. The deal came only eight months after Walstead’s acquisition of Wyndeham Press Group, for which Leumi ABL provided a £19.6 million facility via invoice discounting and plant and machinery finance.

Looking ahead

If the economy continues to improve, then companies will embrace the new business and fill their order books accordingly. Given that a large number of companies are running on the bare minimum after making cutbacks, that will lead to difficulties.

‘There’s a problem looming on the horizon brought about by the recovery – cash flow,’ says Woodward. ‘Proactive businesses can deal with that issue now if they have the necessary collateral, which we can value and lend against. By taking a long-term and holistic view of the financing opportunity, we can maximise the funding available to good businesses, placing them in a strong position to exploit future growth potential.’

According to Woodward, Leumi ABL can also look forward to a rosier M&A environment: ‘Vendors have been holding out for better times and waiting for better prices.

‘Now realising that the sky-high prices of 2007 are unlikely to return, there’s a growing appetite for deals.’

The prospect of expanding order books and greater deal flow means hopes are high: ‘We have a full pipeline of transactional work and we’re excited about 2010,’ Woodward concludes.

For more information, please contact Leumi ABL MD Phil Woodward on 01273 716202 or email pwoodward@leumiabl.co.uk